Contractors Barred From Giving to Campaigns

Q: I am a college professor, and I have a question about restrictions on campaign contributions. A federal agency recently offered me a contract to perform some fairly minor advisory services for the agency. I’d like to accept the contract, but a conversation with another faculty member has given me second thoughts. She says that accepting the contract means I will be prohibited from making any federal campaign contributions of any kind. This could be a deal breaker for me, as I consider myself politically active and I generally like to contribute to candidates I support. Would I really be banned from making contributions if I accepted the agency contract?

A: Believe it or not, the answer is yes — at least for the time being. A court is currently hearing a constitutional challenge that could change this.

The Federal Election Campaign Act restricts the extent to which individuals and organizations may contribute money to federal election campaigns. It sets limits on the amounts of contributions by individuals and prohibits altogether direct contributions by corporations.

One of the act’s restrictions is an outright ban on contributions by any person who is negotiating or performing a contract with a federal agency. In general, it covers all contracts with federal agencies where payment is to come from funds appropriated by Congress. It applies from the time that contract negotiations begin through the contract’s completion. During that period, the contractor may not “make any contribution of money or other things of value, or to promise expressly or impliedly to make any such contribution to any political party, committee, or candidate for public office.”

Many states have similar restrictions on contributions by government contractors to candidates for certain elected offices, which are loosely called “pay to play” laws.

Earlier this year, three individuals with government contracts filed a lawsuit claiming that the ban on contributions is unconstitutional, at least as applied to them. One of the plaintiffs challenging the ban is a law professor who has a $12,000 contract to prepare a report and recommendations for a federal agency. The other two plaintiffs are retired government employees who continue to do work for their former agency, but now as contractors instead of as employees.

The plaintiffs make two arguments. First, they say, the ban violates the Equal Protection clause because it treats plaintiffs differently from other similarly situated parties who are permitted to make campaign contributions. One group of similarly situated parties, the plaintiffs contend, are federal agency employees, including the employees of the very agencies for which two of the plaintiffs do their work. Plaintiffs say that they work side by side with these agency employees, performing many of the same duties. Yet, the employees are permitted to make campaign contributions while plaintiffs are not.

A second group of similarly situated parties, the plaintiffs say, are corporations and their employees. Federal election law allows corporations to establish political action committees, which may make campaign contributions, even if the corporation is a government contractor. Moreover, the plaintiffs argue, the ban does not apply to employees of corporations that contract with the government. The president of a corporation that contracts with the government and even the corporate employees responsible for negotiating government contracts are all free to make political contributions, but individuals who contract directly with the government are not.

The plaintiffs’ other argument is that the restriction violates the First Amendment because it restricts their right to contribute to campaigns yet is not narrowly tailored to serve any legitimate public purpose. Plaintiffs state that the only plausible justification for the ban would be that it somehow prevents corruption or the appearance of corruption. To serve that purpose, plaintiffs concede that it would be justifiable to ban contributions to candidates for positions that are actually involved in the decision-making for government contracts from individuals who are bidding for or performing under such contracts.

Some state pay-to-play laws are designed this way. The federal contribution ban, however, prohibits plaintiffs from making contributions to presidential candidates for president and Members of Congress, even though the president and Members of Congress have no role whatsoever in the awarding of personal services contracts such as the plaintiffs’.

The Federal Election Commission, which is charged with defending the ban, responds that the ban has “deep roots in our nation’s history” and serves two important government interests.

First, it helps prevent corruption and the appearance of corruption. And second, it helps ensure that government contracts are awarded on merit and that contractors are not coerced into political participation. Politics can infect the government contract process, the FEC says, even when elected officials do not formally approve government contracts. Moreover, many agency employees involved in government contract positions owe their jobs to the presidential administration.

For example, federal employees may not solicit campaign donations, while government contractors may. The Constitution requires strict scrutiny of laws that discriminate between different groups when they do so on the basis of a specially protected criterion, such as gender or race. But laws that use some other basis for making distinctions — such as whether someone contracts with government — are constitutional so long as Congress has a rational basis for enacting them.

So, who is right? That is for the court to decide, which may happen as soon as a hearing scheduled for later this month. In the meantime, the ban remains in effect, which means you have a choice to make: accept the government contract or continue being able to make contributions to federal campaigns.

C. Simon Davidson is a partner with the law firm McGuireWoods. Click here to submit questions. Readers should not treat his column as legal advice. Questions do not create an attorney-client relationship.